Tuesday, February 12, 2013

Democracy is Mother of Corruption

Pay the price for democracy to fight corruptionCollected from Economic Times By, Janmejaya K Sinha The brutal rape and senseless killing of the girl in Delhi pushed the issue of corruption of the headlines from the Indian electronic and print media. The frustration around corruption, both big and small, spawned the Anna Hazare movement and also managed to provide Arvind Kejriwal a political platform. However, the discussion has been marked by frustration, hyperbole, cynicism and great naivete.There has been a lot of acrimony and no real introspection. Everyone has been painted vile: be it politicians, bureaucrats, businessman, media, and even the judiciary. Some of the description is no doubt true, but what is the root cause? It appears as if the nation has lost character suddenly. I don't agree with that. In fact, no one has really tried to establish the linkage of corruption with something all Indians hold very dear: our democracy. Let us compare the cost of Indian democracy to the cost of democracy in the US. In 2012, $6.2 billion was spent in the US by candidates fighting elections, including the presidential candidates. In rupee terms, this amounts to something like Rs 35,000 crore. The presidential election alone cost about $3 billion (Rs 16,000 crore), with the two candidates officially raising about $1.2 billion (Rs 6,000 crore). Now, consider the US has about 300 million people, two political parties, higher levels of literacy, two main languages and much easier communication. India has close to 1.2 billion people, a more complex electoral system with 40 political parties, 22 languages and higher barriers to communication. So how much does our democracy cost us? This is what I call the corruption calculus. In this piece, I intend to start a debate on what this cost may be for us and how we fund it.If a Senate seat in the US costs about $10 million to contest, it provides a good benchmark to work with. We have 543 parliamentary seats in India. If we were to assume the same figure of $10 million, it would translate into Rs 55 crore per seat. A bottom-up build-up can easily add up to that number. Each parliamentary seat represents, on average, more than 2.2 million people. Parties conduct a lot of activities to reach people and win their vote. They issue advertisements in newspapers or on television, put up hoardings, engage party workers, organise rallies, transport people to rallies, print brochures, send out letters and the like. Given a new year card costs Rs 50, and even a cheap printed brochure costs more than Rs 5, it would not be unreasonable to assume that each serious party spends about Rs 80 to reach one person. If there are three serious parties per constituency, then all the parties are collectively spending around Rs 240 per person in every constituency. This adds up to about Rs 50 crore per parliamentary seat. If we then talk about 545 seats in Parliament, the Lok Sabha elections cost India about Rs 30,000 crore to contest. Using a similar calculus for the 4,120 state assembly seats in India, where every MLA has to reach out to about 3,00,000 people, we end up with about Rs 7.5 crore per seat. So, the Vidhan Sabha elections cost us another Rs 30,000 crore. Then there are about 1,00,000 municipal corporation seats in India. For simplicity, even if we assume that all parties put together spend about Rs 1 crore per seat, then municipal elections cost us another Rs 1,00,000 crore. Even if this was an overestimate and was true for only the big-city municipal corporation elections, even at half that number, we end up with another Rs 50,000 crore for municipal elections. Thus, just elections cost us between Rs 1,00,000 crore and Rs 1,60,000 crore every five years. In this calculus, I didn't add the cost of running a political party. I don't know how much to ascribe to other facets of running big parties: how much must the party pay party workers, administrative costs of holding rallies and putting up hoardings when leaders arrive, paying for food, not to mention the rumours around the money exchanging hands in close parliamentary votes. However, it would be difficult to go around estimating all of this, but it does not seem unreasonable to believe that another Rs 40,000 crore would be required for all of this. Thus, we can easily see a figure of between Rs 1,50,000 crore andRs 2,00,000 crore as the cost of democracy every five years, or about Rs 40,000 crore a year. Officially, taking somewhat dated financial statements for the three-year period up to 2010, all political parties show income of less than Rs 1,200 crore, the bulk coming from the sale of coupons and the balance by donations. This leads to a big gap of about Rs 35,000 crore per year. This is what I call the corruption calculus.People need not be wicked or evil, but to fight elections, they need a lot more money than what they officially collect. Where does this money come from? Top contributors to my mind will be land, mines, defence contracts and spectrum sales. The next in line would perhaps be civil aviation, railways and other public contracts. In fact, if you reflect on the coalition governments at the Centre, the junior coalition partners always end up with civil aviation and railways! As a country, it is not enough to express outrage at corruption — we need to figure out a way to fund something that is dear to us: our democracy. We can't wish away the problem if we want to seriously tackle corruption. None of the discussion till now has even begun to address this. We love our democracy and have reason to be proud of it. Now we must figure out how to pay for it.